Wonkbook: Welcome to gridlocked America

Welcome to gridlocked America: The GOP is on track to win about 65 seats in the House of Representatives, and 7 or 8 in the Senate. This is a huge victory: the Republican House majority will be the largest since 1928. But it is not a governing majority, even on the congressional level. Democrats still hold the upper chamber. In fact, Harry Reid still leads the upper chamber.

From the perspective of actually getting anything done in the next two years, there was perhaps no worse outcome. Republicans don't fully control Congress, so they don't have enough power to be blamed for legislative outcomes. But Democrats don't control the House and they don't have a near-filibuster proof majority in the Senate, so they can't pass legislation. Republicans, in other words, are not left with the burden of governance, and Democrats are not left with the power to govern. Republicans don't have to be responsible, and Democrats can't do it for them.

For the time being, this means that the gains of Obama's first two years are probably safe. Health-care repeal will not pass the Senate, and if Republicans attempt to defund the program, it will be the House acting on its own -- a less tenable position than the Congress acting against the executive. It is also difficult to see major new stimulus programs -- for instance, a payroll-tax holiday -- finding backers in Congress, as Republicans will not be able to take full credit for them. This will be, instead, a time of implementation for the White House, oversight for the House, and paralysis for the Senate. As for getting the economy back on track, that's now Ben Bernanke's job, whether he wants it or not.

A Republican House will benefit multinationals and sectors facing aggressive regulation, reports Corey Boles: "Multinational corporations, such as International Business Machines Corp., Merck and Company Inc. and Caterpillar Inc., that get a big part of profits from overseas will also breathe easier. Under Democratic control of Congress, these companies faced the prospect of higher taxes on overseas profits and potential penalties levied against them for moving jobs to other countries. Citigroup Inc., J.P. Morgan Chase & Co. and other financial services firms, already reeling from the new Dodd-Frank Wall Street Reform and Consumer Protection Act, likely won't see more meddling legislation."

Jim DeMint issues advice to freshman conservative Senators: "Hire conservative staff. The old saying 'personnel is policy' is true. You don't need Beltway strategists and consultants running your office. Find people who share your values and believe in advancing the same policy reforms. Staff who are driven by conservative instincts can protect you from unwanted, outside influences when the pressure is on...Don't seek titles. The word 'Senator' before your name carries plenty of clout. All senators have the power to object to bad legislation, speak on the floor and offer amendments, regardless of how they are ranked in party hierarchy.

Health-care reform will probably be changed on the margins, but neither repealed nor defunded, writes Ezra Klein: Politicians of both parties are risk-averse, and the likeliest outcome is that this fight is effectively tabled - particularly if, as looks likely, Democrats hold the Senate. Republicans might mount a mostly symbolic vote on repealing the bill, and they could make a show of holding up appropriations in exchange for some smaller compromises on provisions that Democrats won't fight to the death over. But in the end, they are more likely to try to persuade their base to take the longer view and see this battle as one that will really be decided in 2012, when conservative voters will have the opportunity to replace President Obama with a leader who has no intention of protecting -- or implementing -- the bill.

Congress needs to tackle the Bush tax cuts now, writes David Leonhardt: "Right now, the 400,000th dollar earned by a surgeon is taxed at the same 35 percent marginal rate as the four millionth dollar earned by a hedge-fund manager. This makes little sense, and it runs counter to how the tax code worked for much of the 20th century. The top brackets once distinguished between the merely affluent and the truly rich. In 1960, for example, the top marginal rate (of 91 percent) started at $400,000, which is the equivalent of almost $3 million today. Congress could take a small step back in this direction by extending all the Bush tax cuts for households making less than $1 million a year. At the same time, though, a new tax bracket would start at $1 million...It would probably cost something like $30 billion a year, rather than the $60 billion for extending all the upper-income cuts."

Still to come: Pimco's chief still thinks the economy needs Congress's help; retiring senator Evan Bayh counsels spending restraint; California's newly passed Proposition 26 could make climate change regulation impossible; anti-union education reform groups are showing political strength; and a kitten is confused by his reflection in a mirror.

Economy/FinReg

The economy still needs help from the government, writes Pimco-head Mohamed A. El-Erian: "Today, many large companies and rich households are in a good position to move forward. They have the means to spend and hire. Yet they lack the willingness to do either...This world speaks to a different characterization of private-sector activity - rather than able and willing to move forward unhindered if the government simply gets out of the way, this is a private sector that faces too many headwinds."

"Simply put, these realities make it necessary for Washington to resist two years of gridlock and policy paralysis. Democrats and Republicans must meet in the middle to implement policies to deal with debt overhangs and structural rigidities. The economy needs political courage that transcends expediency in favor of long-term solutions on issues including housing reform, medium-term budget rules, pro-growth tax reforms, investments in physical and technological infrastructure, job retraining, greater support for education and scientific research, and better nets to protect the most vulnerable segments of society."

Democrats should show spending restraint if they want Americans to trust them again, writes Evan Bayh: "In the near term, every policy must be viewed through a single prism: does it help the economy grow? A good place to start would be tax reform. Get rates down to make American businesses globally competitive. Reward savings and investment. Simplify the code to reduce compliance costs and broaden the base...To regain our political footing, we must prove to moderates that Democrats can make tough choices. Democrats should ban earmarks until the budget is balanced....Democrats should support a freeze on federal hiring and pay increases. Government isn’t a privileged class and cannot be immune to the times....The most important area for spending restraint is entitlement reform.

JP Morgan is being investigated by the SEC over subprime practices, report Joshua Gallu and Dawn Kopecki: "The U.S. Securities and Exchange Commission is probing whether JPMorgan allowed Magnetar to choose assets for a $1.1 billion collateralized debt obligation known as Squared, according to the person, who declined to be identified because the investigation isn’t public. JPMorgan lost about $880 million on the deal, according to ProPublica, which reported the investigation earlier today. The inquiry is part of a broader investigation of how Wall Street firms bundled and sold mortgage-linked investments as the housing market declined in 2007, contributing to more than $1.8 trillion in losses and writedowns worldwide."

The US will cut its ownership stake in GM by a third when it goes public, report Jia Lynn Yang and Peter Whoriskey: "The Treasury Department is expected to sell about $7 billion of its shares, bringing the government's ownership of the beleaguered auto company down from 61 percent to 35 percent. The Obama administration is eager to begin unwinding the extraordinary rescue of GM that took place after the financial crisis even as doubts remain that the government will ever fully recover the $50 billion of taxpayer money spent on the firm's bailout. The company will go public about Nov. 17, and the stock will probably be priced from $26 to $29 a share - much lower than what some analysts say it should fetch."

Labor unions are claiming to have tipped the vote to Democrats in certain races:http://bit.ly/9yAJnp

New members of Congress should look to Pat Moynihan for guidance, writes Steven Pearlstein: "Moynihan's great gift was that he could see how emerging political, social and economic trends were likely to play out before almost anyone else. He was among the first to call for the end of welfare as we know it, to warn of the coming political backlash against affirmative action and to sense the growing alienation of the working class from an increasingly liberal and elitist Democratic Party. He also was among the first to sound the alarm on global warming (in 1969!)...Long before it was conventional wisdom, he called attention to the stagnation in working-class wages and the irrepressible inflation in health-care spending."

Cutting government spending should be Obama's "Nixon in China" moment, writes Mitt Romney:http://wapo.st/adzeIA

The just-passed Proposition 26 will make environmental regulation tougher in California, reports Margot Roosevelt: "Many of the large oil-producing companies judged the global-warming initiative as too controversial, and unlikely to succeed, they found another way to express their views. In the last two weeks of the campaign, they have poured millions of dollars into promoting Proposition 26, a measure on Tuesday's ballot that would require a two-thirds vote, rather than a simple majority, for the state Legislature and local governments to assess many fees on business...Environmentalists fear that Proposition 26 will make it almost impossible to enforce regulations under AB 32, the state's ambitious climate-change law as well as to enact fees aimed at combating pollution and hazardous waste."

BP is again making profits, report Brian Skoloff and Jane Wardell: "BP said that costs related to the April 20 oil spill dragged down its third-quarter profit by more than 60 percent. The London-based company earned $1.79 billion from July through September, compared with $5.3 billion a year earlier. But the fact that BP returned to profits at all, coming after a loss of $17.2 billion in the second quarter, indicated the company's operations remain solid despite the spill. 'That's real good news they're making money because at least we know they have the ability to pay us over a long period of time because we've still got a lot of problems,' said shrimp processor Rudy Lesso, whose Biloxi, Miss. business is down about 25 percent because much of the public is still afraid to eat Gulf seafood."

A solar technology manufacturer is cutting jobs in response to Chinese competition, reports Todd Woody: "The cost-cutting move, which will reduce the company’s previously announced production capacity, is a sign of the notable shift in the prospects for cutting-edge American solar companies, which now face intense price competition from Chinese manufacturers that use more established photovoltaic technologies. Just seven weeks ago, Solyndra opened Fab 2, a $733 million factory in Fremont, Calif., to make its high-tech solar panels. The new plant was supposed to be the first phase of a rapid expansion of the company. Instead, Solyndra has decided to shutter the old plant and postpone plans to expand Fab 2, which was built with a $535 million federal loan guarantee."

Nations at a biodiversity conference are considering a ban on geoengineering research:http://bit.ly/9fJfCg

Japan's auto industry is shifting toward electric cars, reports Hiroko Tabuchi: "Sooner or, more likely, later the electric car could render thousands of companies superfluous here in the heart of Japan’s auto parts region. No more engines. No call for exhaust pipes. Spark plugs? Gone with the electric-car wind. Or so, in essence, warns a recent widely circulated study that predicts the eventual demise of much of Hamamatsu’s gasoline engine economy. Spurred by that study and a general sense of foreboding, carmakers, parts factories and local governments in this sprawling industrial town are joining forces to prepare for a future of electric vehicles."

Three major committee chairmen lost reelection, reports Damian Paletta: "Mr. Spratt, who chairs the House Budget Committee, lost to state senator Mick Mulvaney, a development that could have an immediate impact on the near-term budget plans for the Obama administration. Mr. Spratt has been in Congress for 14 terms and is on the White House’s bipartisan deficit reduction commission, which is supposed to issue recommendations on how to balance the budget by Dec. 1...Ms. Lincoln, who chairs the Senate Agriculture Committee, lost to Republican Rep. John Boozman. Ms. Lincoln was in her second term as a senator and played a central role in the Dodd-Frank financial overhaul bill, authoring a provision that limits the ability of banks to trade certain derivatives."

Anti-union education reform groups are showing electoral muscle, reports Stephanie Banchero: "Stand for Children, based in Portland, Ore., has given $1.5 million to candidates who support overhauling teacher-tenure policies. The group has pumped $600,000 into Illinois alone. Democrats for Education Reform, which lobbies for charter schools and tougher teacher evaluations, has spent about $250,000 of its own money and gathered another $1.7 million in fund-raising efforts that went to candidates, mainly in New York and Colorado, said Joe Williams, executive director of the New York-based advocacy group...Although the groups are contributing more money this year, their spending remains significantly smaller than that of teachers unions."

The Supreme Court appears split on the constitutionality of banning violent video games for minors:http://wapo.st/aZDS17

Federal salaries are falling further behind private ones, report Lisa Rein and Eric Yoder: "Official numbers released by the government last week show salaries of federal workers falling slightly further behind their private-sector counterparts in the past year, by an average of 2.1 percent across the country...The new numbers were in Friday's annual report from the Bureau of Labor Statistics to the Federal Salary Council, a presidentially appointed panel tasked with recommending pay for federal workers. The gap cited Friday will help the council recommend government raises to President Obama for 2012. Congress has not approved a raise for 2011."

Republicans should focus on allowing bare-bones health policies, writes Holman Jenkins: "Let's permit insurers to design their policies free of ObamaCare's mandated benefit levels and free of state regulation. Let's let these policies be purchasable with pre-tax dollars and allow them to satisfy ObamaCare's mandate requiring individuals to have insurance and employers to provide it. Yes, we know the ObamaCare mandate is objectionable on philosophical and constitutional grounds, but since we're seemingly bent on taxing ourselves to make medical care available to those who can't or won't pay for it themselves, an individual mandate perhaps is the only way to short-circuit a collapse toward government-run, single-payer health care under the burden of free-riding."

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams. Photo credit: Bill O'Leary-Washington Post.

Ezra, if Congress had been gridlocked in 2009 and 2010, we'd not have the crazy patchworked misguided healthcare laws that NO legislator, nor the president, bothered to read before the enacted it!

With gridlock a tax rate compromise would have been worked out and the $800 Billion Stimulus would have contained funds for projects that could have actually stimulated private industry and created real jobs.

He is one of the main reasons why Democrats lost...dither, dither, dither and talk compromise with the GOP. And what did he get from that? Retirement rather than face a tough election and HE LEFT WITH $10 MILLION IN CAMPAIGN CONTRIBUTIONS in his bank accounts.

I hope we have seen the last of him, but I fear that the pundits who see a magical compromise to the center will keep pulling him back and using him as a voice of reason. He's not a voice of reason. He's just a quitter, who quit rich while bad-mouthing his 'team'. Can you say spoiled brat?

You're whistling past the graveyard. Republicans are committed on repealing or defunding health care reform. They can't change the law but they can prevent money from being spent. This is not something they either can or want to walk away from. That would be the equivalent of Obama having walked away from it after he was elected.

I love the whining over Evan Bayh. I'd love a coherent explanation as to if he had handed over his entire $10MM war chest to whoever wanted it from the Dems how they'd stop the "onslaught" of foreign corrupt money from stealing this election from the rightful rulers of this country. Alright i'll slow down the snark a bit but seriously how would he have been able to stave off wave by giving that amount away to Dems? So instead of 60 seat losses it would have been 55 MAYBE? You want a face to blame, blame Ms. Nancy's polarizing positions. Its like if Republicans were to elect Rand Paul majority leader. Its asking for trouble and they should have known it.

With the Democrats telling themselves that the recession, not the policies is why they took a drubbing yesterday, the logical progression of things to come spells disaster for Democrats. There is a denial that the people reject the socialist/egalitarian model for government. And with this denial will come more of the same; with more of the same, the resentment will grow and spread.

Because the legislature needs cooperation with the senate, it will not be able to forward any bill to the president that Harry Reid does not agree to. And though Republicans control the legislature they will be helpless and ineffective at stopping President Obama from implementing the egalitarian agenda through executive order.

But things are changing with the people. People are educating themselves and it is making them alert to the ideology of Marx, Mao and Stalin. Tea Party gatherings discuss Enlightenment philosophy, the history and the struggles that gave us liberty, as they did in the taverns of the eighteenth century. They are beginning to see that we have become complacent about our freedom and that BS has taken us down this road. And, they are "enlightening' others; that is a game changer.

President Obama I call on you to veto everything the teabagheadnazilunatics send you. Cooperate with them they exact same way they cooperated with you when you had a mandate. Do not allow them to pass a single thing they want the brain dead idiots. That moron w caused all of this.

It's disgusting to see in print that it's "business as usual". These new Republicans were put into office for two short years. They will be held to higher standards and IBM, Merck, and Caterpillar should be just as concerned today as yesterday. The bloated defense budget needs cut. The economy needs work and it's time to start cleaning up Washington. If not the next new group can have their chance. 2012 will be here quickly and the House knows if they want to keep their new jobs they will deliver on their campaign promises. Coasting in Washington is not an option.

Will anything get done? Worldwide: India will continue to be dynamic and its economy will grow; so will China's, but the latter will bump up against increased diplomatic and economic conflict with the EU, the US, and its Asian neighborhoods if it continues to hold the yuan (renminbi) to an artificially low value on international currency exchanges; despots, murderous dictators, and autocrats everywhere will continue consolidating their power, or expanding it. Domestically: probably stagger and drift, mutual intraparty and interparty recriminations, GOP blockade on any Obama adm. initiative to regulate financial markets, reduce income inequality, or make the tax system fairer. So our nation will continue its tailspin, the Middle East will continue to be an insoluble hotbed (with no one paying attention to what is seen as a powerless Obama adm.), and India and China will continue to rise.

It's finally reached the point where Americans are fed up with excuses. The Democrats let us down for two years. The Republicans have until June 2011 to turn the economy around and get Americans working again. That's six (6) months from the day all the new faces will be sworn in! You have until then to practice hitting the ground running! That's how impatient we all are! We're not waiting any longer for Democrats and Republicans to do what should've been done a long time ago. We don't want to hear "Give us time! We just got elected! It took two years for Obama to create this mess!" No, you have 6 months to turn it around! And don't even think of cutting off anyone's unemployment benefits! At least not until you've deported the last illegal immigrant, until you've whittled the national unemployment rate down below 5 percent, until you've stemmed the flow of manufacturing jobs to China! There are plenty of other countries where you can beat the people into submission and get rich off their toil and sweat, but not here in America. Not anymore. Six months!

I disagree that Congress will be gridlocked--unless, Ezra, you are solely focusing on large, liberal-wish-list programs. I see this as an opportunity to reach middle-of-the-road solutions to America's problems. The question will be whether Dems have the will to tack back to center to get something done. To get bills through the Senate, they will have to be palatable to Dems and Repubs. I don't see that as impossible. Also, I see a payroll tax holiday as a gimme.

"This will be, instead, a time of implementation for the White House,..."

What he means is that the executive branch can now focus on getting that vast government-in-the-shadows, the bureaucracy, to unleash its fury and usher in the redistributive model that the Democrats are so fond of.

Hey, it got their base into housing, for a while, and we all know how that worked out.

And right now while we are worrying about America's economy, Pres. Obama and 800-member entourage are spending $200 million/day visiting Malasia.
Is this really the time for junket/vacations to foreign lands?

will anything get done...
that depends on obama and the senate...
budget bills originate in the house...
will the senate and obama participate...
or will they obstruct...
the people are watching...

Posted by: DwightCollins | November 3, 2010 10:52 AM
___________________________________________
Do you mean like the Republicans participated and did not obstruct? Republicans have no room to talk about this issue.

Republicans managed to throw sand in the gears working with a minority. They ought to really be able to make a mess of things now. Will they blame themselves? Are you kidding? What will the propose? No taxes for the richest among us and let's deregulate! The fix is in.

Excuse me: it's Mumbai--from NDTV: Mumbai: "The US would be spending a whopping $200 million (Rs. 900 crore approx) per day on President Barack Obama's visit to the city.

"The huge amount of around $200 million would be spent on security, stay and other aspects of the Presidential visit," a top official of the Maharashtra Government privy to the arrangements for the high-profile visit said.

About 3,000 people including Secret Service agents, US government officials and journalists would accompany the President. Several officials from the White House and US security agencies are already here for the past one week with helicopters, a ship and high-end security instruments." --credit: NDTV

Gridlock is good.It will stop the socialistic slide that the Democrats tried to force down America's throat.Another blood bath will occur in the elections of 2012 when the rest of the loony Dems will be sent home for good.That includes our empty suited president Lord Obama.

The answer is, not if John Boehner has anything to say about it! He has sworn to be as obstructionist as possible. yeah John, that'll teach 'em! Instead of doing good things for country, just obstruct everything! Very adult of you.

While I personally cannot stand Nancy Pelosi, Boehner as Speaker is going to be a huge waste of time and expense for this country which can ill afford either.

I'm not sure gridlock is such a bad thing. I have a hard time figuring out why we need so many new laws, direction and regulations every year on issues that have been around and have been regulated to death for years. We need a moratorium on any new laws and regulations for a couple years to get a grip on the crap that past state and federal clowns have foisted on us. Too many legislators working to pass laws and regulations for special interests, not for the good of all. For example, why would we need hundreds of changes on the IRS code every year if it wasn't already a mess? It has been around for years and it is still not 'right'?

Gridlock in America is sometimes the best thing for what ails us. Gridlock forces parties to work together to pass major reforms. It prevents one major political party from dominating the agenda and creating policies that will later have to be repealed.

There are certainly a number of voters that were upset with the way in which health-care was passed.

It was under a gridlocked Congress that the nation finally balanced the budget in the late 90s. There are numerous times when gridlock has proven valuable. Why is gridlock such a bad thing?

The republicans have now been backed into a corner, although they just don't realize it yet. As many voters said in exit polls, it was more of a vote AGAINST the incumbents that a vote FOR the republicans. The voters were unhappy that the Congress did not solve the problems facing the nation that they cared about: jobs, deficit, health care. So now the republicans will have to actually propose solutions to address those issues, or the voters are likely to be just as angry toward incumbents in 2012 as they were in 2010. I don't think the new class of republicans will get a free pass any more than the freshman class of democrats who were elected in 2008 received. And it is likely that conservative republican rhetoric will not be able to live up to the public's 'sniff test.' The public likely is not going to be enamored with the republican ideas any more than they liked the democrats solutions. Representatives elected by America Inc. are going to have to justify their positions in face of the public's objections to continued tax breaks for the very rich, allowing companies to move jobs overseas, and massive cuts in education and health care to reduce the deficit. Remember that you can eliminate almost the entire federal budget other than defense and social security and you still won't come close to balancing the budget. So military contracts for ships, airplanes, tanks, etc as well a military bases will have to be closed putting lots of locals out of work, social security and medicare benefits will have to be cut, angering a huge number of older voters who are very self-centered voters and will be really mad and want to punish any member who votes for such measures. So its going to be very difficult for the republicans to do much different than what the democrats have proposed and then the voters will be really really REALLY mad.

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